Market updates as second-quarter earnings season kicks off
From CNN's Nicole Goodkind, Krystal Hur and Elisabeth Buchwald
Updated 7:18 a.m. ET, July 14, 2023
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4 min ago
US economy "continues to be resilient," says JPMorgan Chase CEO Jamie Dimon
American consumers are still powering the US economy, which "continues to be resilient," said JPMorgan Chase CEO Jamie Dimon in a statement Friday.
"Consumer balance sheets remain healthy, and consumers are spending, albeit a little more slowly," Dimon said, while noting that consumers' cash buffers are slowly being drained.
While job growth remains strong, he said there are still "salient risks in the immediate view," including stubborn inflation, the risk of more rate hikes from the Federal Reserve, and geopolitical tensions.
"While we cannot predict with any certainty how these factors will play out, we are currently managing the Firm to reliably meet the needs of our customers and clients in all environments," he said.
BlackRock reports over 20% increase in second-quarter earnings from prior year
BlackRock on Friday beat earnings expectations for its latest quarter.
The world's largest asset manager, with $9.4 trillion, reported second-quarter diluted earnings of $9.06 per share, or $9.28 adjusted, compared to expectations of $8.52 per share, according to FactSet.
The company reported revenue of about $4.5 billion, falling slightly below expectations.
10 min ago
JPMorgan Chase reports record revenue again
JPMorgan Chase reported record revenue for another quarter.
The nation's biggest bank reported $41.3 billion in revenue, surpassing expectations of $38.7 billion for the second quarter.
The economic bellwether reported earnings of $14.5 billion, or $4.75 per share, compared to analysts' expectations of $3.97 per share, according to FactSet.
Earnings were about $4.37 per share excluding significant expenses like JPMorgan's purchase of First Republic, after the regional lender collapsed earlier this year.
JPMorgan Chase reported first-quarter profit and record revenue that roundly beat expectations.
Shares rose roughly 3% in premarket trading.
50 min ago
Wall Street takes a breath ahead of earnings
After four straight days of gains, stock futures started the day slightly lower on Friday, ahead of second-quarter earnings from America's biggest names in banking.
Markets closed higher on Thursday as investors cheered a cooler-than-expected Producer Price Index report for June that showed wholesale inflation continued its yearlong slowdown last month, rising by just 0.1% for the 12 months ended in June.
That came after the Nasdaq Composite and S&P 500 reached their highest levels this year on Wednesday, after encouraging Consumer Price Index data for June.
Market watchers are expecting downbeat earnings, with a projected decline of 7.6% for companies listed on the S&P 500, compared to the prior year, according to FactSet.
50 min ago
The Nasdaq-100 index is getting a fresh look
The Nasdaq-100 index, which comprises 100 of the largest non-financial companies listed on the exchange, is getting a facelift this month.
That's because just seven companies currently account for roughly 51% of the index.
Those top seven stocks, Amazon, Apple, Alphabet, Meta Platforms, Microsoft, Nvidia and Tesla, dubbed by some the Magnificent Seven, have skyrocketed this year on artificial intelligence buzz.
They have also driven the lion's share of the market's rally this year, although that run has widened in recent weeks to include a more diverse basket of stocks.
The huge gains mean that these big tech stocks have become bloated in some indexes, which are often weighted by market capitalization. That can pose a problem to investors, since it leaves the market vulnerable to large swings driven by just a handful of companies.
So the tech-heavy index will undergo a "special rebalance," which will "address overconcentration in the index by redistributing the weights," Nasdaq said in a press release.
Nasdaq won't remove or add any stocks to the index during this rebalance, according to the release.
50 min ago
What to expect from bank earnings
Customers line up outside a Wells Fargo branch in a neighborhood of Los Angeles in April 2020. Damian Dovarganes/AP/FILE
The second-quarter earnings season kicks off on Friday with results from big banks including JPMorgan Chase, Citigroup, Wells Fargo and BlackRock.
While big banks reported mostly solid results for the first quarter after the collapses of Silicon Valley Bank and Signature Bank, investors will be watching for insights into how much credit conditions have tightened and the impact that this has had on the economy.
The health of American consumers, who have spent robustly despite persistent inflation and the Federal Reserve's interest rate hikes, will also be a key focus.
Analysts have a low bar for second-quarter earnings results. The projected earnings decline for companies listed in the S&P 500 is roughly 7.6% compared to the prior year, according to FactSet.
That would be the third consecutive quarter of declines and the largest earnings decline reported by the broad-based index since a roughly 32% loss during the second quarter of 2020.
Big banks aren't excluded from those low expectations.
"We believe Q2 2023 has been challenging for most banks, with worries about rising rates curtailing loan demand, rising credit loan risk exposure, and uncertainties on bank policy and regulation following the three bank failures in March," wrote Kenneth Leon, director of equity research at CFRA, in a research note.
50 min ago
Key US inflation gauge cooled last month to the lowest level in nearly three years
A worker monitors the processing of tortilla chips at a factory in San Bernardino on June 29. Watchara Phomicinda/MediaNews Group/The Press-Enterprise/Getty Images
Wholesale inflation continued its yearlong slowdown last month, rising by just 0.1% for the 12 months ended in June, according to the Bureau of Labor Statistics’ Producer Price Index released Thursday.
The PPI index, a key inflation gauge that tracks the average change in prices that businesses pay to suppliers, has cooled significantly since peaking at 11.2% in June 2022 and has now declined for 12 consecutive months. Annual producer price inflation is at its lowest level since August 2020, BLS data shows.
On a monthly basis, prices increased by 0.1%.
Prices for services — which increased 0.2% from May — were the primary driver behind June’s slight increase.
PPI is a closely watched inflation gauge since it captures average price shifts before they reach consumers and is a proxy for potential price changes in stores.
While the PPI index doesn’t directly correlate into exactly what will come from the following month’s Consumer Price Index — a major inflation gauge that tracks price shifts for a basket of goods and services — it provides a look at whole economy inflation, minus rents, said Alex Pelle, Mizuho Securities US economist.
And that picture right now is looking pretty sharp.
“It’s definitely a good month for inflation,” Pelle told CNN. “You saw that in CPI, and now you’re seeing it in PPI.”
In June, inflation as measured by the CPI cooled to 3% annually, its lowest rate since March 2021, the BLS reported Wednesday.
50 min ago
Mortgage rates jump higher, closing in on 7%
In an aerial view, homes stand in front of the Oakland-San Francisco Bay Bridge on June 9 in San Francisco, California. Justin Sullivan/Getty Images
US mortgage rates climbed higher this week, inching closer to 7% and reaching their highest level since November.
The 30-year fixed-rate mortgage averaged 6.96% in the week ending July 13, up from 6.81% the week before, according to data from Freddie Mac released Thursday. A year ago, the 30-year fixed-rate was 5.51%.
Mortgage rates have remained over 5% for all but one week during the past year and even went as high as 7.08%, last reached in November. Rates had been coming down and were under 6.5% for most of the spring.
“Incoming data suggest that inflation is softening, falling to its lowest annual rate in more than two years,” said Sam Khater, Freddie Mac’s chief economist. “However, increases in housing costs, which account for a large share of inflation, remain stubbornly high, mainly due to low inventory relative to demand.”
The second-quarter earnings season kicks off early Friday with a slew of financial reports from the biggest banks.
After the collapse of three regional banks earlier in the year, markets are watching for signs that banks are less willing to lend money.
First up Friday are earnings from JPMorgan Chase, Citigroup, Wells Fargo and BlackRock, with smaller regional banks reporting next week.
American consumers are still powering the US economy, which "continues to be resilient," said JPMorgan Chase CEO Jamie Dimon in a statement Friday.
"Consumer balance sheets remain healthy, and consumers are spending, albeit a little more slowly," Dimon said, while noting that consumers' cash buffers are slowly being drained.
While job growth remains strong, he said there are still "salient risks in the immediate view," including stubborn inflation, the risk of more rate hikes from the Federal Reserve, and geopolitical tensions.
"While we cannot predict with any certainty how these factors will play out, we are currently managing the Firm to reliably meet the needs of our customers and clients in all environments," he said.
BlackRock on Friday beat earnings expectations for its latest quarter.
The world's largest asset manager, with $9.4 trillion, reported second-quarter diluted earnings of $9.06 per share, or $9.28 adjusted, compared to expectations of $8.52 per share, according to FactSet.
The company reported revenue of about $4.5 billion, falling slightly below expectations.
JPMorgan Chase reported record revenue for another quarter.
The nation's biggest bank reported $41.3 billion in revenue, surpassing expectations of $38.7 billion for the second quarter.
The economic bellwether reported earnings of $14.5 billion, or $4.75 per share, compared to analysts' expectations of $3.97 per share, according to FactSet.
Earnings were about $4.37 per share excluding significant expenses like JPMorgan's purchase of First Republic, after the regional lender collapsed earlier this year.
JPMorgan Chase reported first-quarter profit and record revenue that roundly beat expectations.
Shares rose roughly 3% in premarket trading.
After four straight days of gains, stock futures started the day slightly lower on Friday, ahead of second-quarter earnings from America's biggest names in banking.
Markets closed higher on Thursday as investors cheered a cooler-than-expected Producer Price Index report for June that showed wholesale inflation continued its yearlong slowdown last month, rising by just 0.1% for the 12 months ended in June.
That came after the Nasdaq Composite and S&P 500 reached their highest levels this year on Wednesday, after encouraging Consumer Price Index data for June.
Market watchers are expecting downbeat earnings, with a projected decline of 7.6% for companies listed on the S&P 500, compared to the prior year, according to FactSet.
The Nasdaq-100 index, which comprises 100 of the largest non-financial companies listed on the exchange, is getting a facelift this month.
That's because just seven companies currently account for roughly 51% of the index.
Those top seven stocks, Amazon, Apple, Alphabet, Meta Platforms, Microsoft, Nvidia and Tesla, dubbed by some the Magnificent Seven, have skyrocketed this year on artificial intelligence buzz.
They have also driven the lion's share of the market's rally this year, although that run has widened in recent weeks to include a more diverse basket of stocks.
The huge gains mean that these big tech stocks have become bloated in some indexes, which are often weighted by market capitalization. That can pose a problem to investors, since it leaves the market vulnerable to large swings driven by just a handful of companies.
So the tech-heavy index will undergo a "special rebalance," which will "address overconcentration in the index by redistributing the weights," Nasdaq said in a press release.
Nasdaq won't remove or add any stocks to the index during this rebalance, according to the release.
Customers line up outside a Wells Fargo branch in a neighborhood of Los Angeles in April 2020. Damian Dovarganes/AP/FILE
The second-quarter earnings season kicks off on Friday with results from big banks including JPMorgan Chase, Citigroup, Wells Fargo and BlackRock.
While big banks reported mostly solid results for the first quarter after the collapses of Silicon Valley Bank and Signature Bank, investors will be watching for insights into how much credit conditions have tightened and the impact that this has had on the economy.
The health of American consumers, who have spent robustly despite persistent inflation and the Federal Reserve's interest rate hikes, will also be a key focus.
Analysts have a low bar for second-quarter earnings results. The projected earnings decline for companies listed in the S&P 500 is roughly 7.6% compared to the prior year, according to FactSet.
That would be the third consecutive quarter of declines and the largest earnings decline reported by the broad-based index since a roughly 32% loss during the second quarter of 2020.
Big banks aren't excluded from those low expectations.
"We believe Q2 2023 has been challenging for most banks, with worries about rising rates curtailing loan demand, rising credit loan risk exposure, and uncertainties on bank policy and regulation following the three bank failures in March," wrote Kenneth Leon, director of equity research at CFRA, in a research note.
A worker monitors the processing of tortilla chips at a factory in San Bernardino on June 29. Watchara Phomicinda/MediaNews Group/The Press-Enterprise/Getty Images
Wholesale inflation continued its yearlong slowdown last month, rising by just 0.1% for the 12 months ended in June, according to the Bureau of Labor Statistics’ Producer Price Index released Thursday.
The PPI index, a key inflation gauge that tracks the average change in prices that businesses pay to suppliers, has cooled significantly since peaking at 11.2% in June 2022 and has now declined for 12 consecutive months. Annual producer price inflation is at its lowest level since August 2020, BLS data shows.
On a monthly basis, prices increased by 0.1%.
Prices for services — which increased 0.2% from May — were the primary driver behind June’s slight increase.
PPI is a closely watched inflation gauge since it captures average price shifts before they reach consumers and is a proxy for potential price changes in stores.
While the PPI index doesn’t directly correlate into exactly what will come from the following month’s Consumer Price Index — a major inflation gauge that tracks price shifts for a basket of goods and services — it provides a look at whole economy inflation, minus rents, said Alex Pelle, Mizuho Securities US economist.
And that picture right now is looking pretty sharp.
“It’s definitely a good month for inflation,” Pelle told CNN. “You saw that in CPI, and now you’re seeing it in PPI.”
In June, inflation as measured by the CPI cooled to 3% annually, its lowest rate since March 2021, the BLS reported Wednesday.
In an aerial view, homes stand in front of the Oakland-San Francisco Bay Bridge on June 9 in San Francisco, California. Justin Sullivan/Getty Images
US mortgage rates climbed higher this week, inching closer to 7% and reaching their highest level since November.
The 30-year fixed-rate mortgage averaged 6.96% in the week ending July 13, up from 6.81% the week before, according to data from Freddie Mac released Thursday. A year ago, the 30-year fixed-rate was 5.51%.
Mortgage rates have remained over 5% for all but one week during the past year and even went as high as 7.08%, last reached in November. Rates had been coming down and were under 6.5% for most of the spring.
“Incoming data suggest that inflation is softening, falling to its lowest annual rate in more than two years,” said Sam Khater, Freddie Mac’s chief economist. “However, increases in housing costs, which account for a large share of inflation, remain stubbornly high, mainly due to low inventory relative to demand.”
